Oliver Thone v Jimik Investments Pty Ltd

[2002] ATMO 119

TRADE MARKS ACT 1995

DECISION OF A DELEGATE OF THE REGISTRAR OF TRADE MARKS WITH REASONS

Re:Opposition by Oliver Thone to registration of trade mark application 746400(1) - R DEVICE - filed in the name of Jimik Investments Pty Ltd.

Date of Decision:

19 December 2002

Delegate:

Hearing Officer Geoff Purvis-Smith

Representation:

Opponent - Mr Ben Fitzpatrick instructed by Davies Collison Cave

Applicant - Mr John Behm of JC Behm & Associates

Decision:

ss. 41, 42(b), 59, and 62 grounds unsuccessful

Opposition dismissed

Costs awarded to applicant

Background

On 15 October 1997, the applicant, Jimik Investments Pty Ltd of Byron Bay in New South Wales (Jimik), lodged an application for the following trade mark:

in class 1 for a one part chemical solution for mixing with cement and soil to create a stable solid malleable composition.  I will refer to this trade mark as the "R" device.  The application was accepted in due course by the Trade Marks Office.  The acceptance was advertised in the Australian Official Journal of Trade Marks on 30 April 1998.  Mr Oliver Thone lodged his notice of opposition on 30 July 1998.

On 16 August 2001, the Federal Court ordered that the opposition proceedings be suspended until such time as an award had been handed down by the International Court of Arbitration.  The opposition was eventually reactivated pursuant to the Federal Court orders on 2 September 2002. 

The opposition was heard in Canberra on 30 September 2002, before me as delegate of the Registrar of Trade Marks.  The applicant was represented at the hearing by Mr John Behm of JC Behm & Associates.  The opponent was represented by Mr Ben Fitzpatrick of counsel on instructions from Davies Collison Cave.

The notice of opposition contained a plethora of grounds. However, at the hearing, the opponent limited its grounds of opposition to those grounds relying on ss.41, 42, 59 and 62 of the Trade Marks Act 1995. The s.42 ground was raised only on one technical point, relating to the authorship of the applied for trade mark.

The parties to the dispute

The opponent, Mr Oliver Thone, is the son of Mr Gerd Thone. To avoid confusion, I will refer to Mr Oliver Thone as "the opponent", and Mr Gerd Thone as "Mr Thone".  Mr Thone lives in Germany, and is the inventor of a product called "Renolith" which can be described as a concrete additive.  Patent Applications were taken out in both Germany and Australia, as well as an International Patent.  The opponent has an Australian trade mark registration (number 739970) for the word mark RENOLITH (the Renolith trade mark).   The registration has a priority date of 23 July 1997 and covers Class 19 additives for cement and concrete.

On 9 January 1996, Mr Thone entered into a Heads of Agreement with Jimik.  On 1 September 1996, Mr Thone and Jimik entered into a more formal Distribution & Marketing Agreement (the Agreement).

Under the terms of the Agreement, Jimik alleges that it acquired the rights to market and distribute the product called Renolith.  Further, under the terms of the Agreement, Jimik had the option to purchase a fifty percent share of Mr Thone's intellectual property rights in the German patent.  Jimik had the responsibility for securing any necessary licences of (sic) government consents which were necessary to give effect to the Agreement.  Royalties were to be paid to Mr Thone.  Failure to pay the royalties was a ground for unilateral termination of the Agreement. 

In the end, Mr Thone purported to terminate the Agreement on 22 July 1997 on the basis that the royalties had not been paid.  Jimik disputes that this was a valid termination.

Despite having asserted in his declaration of 17 May 1999 that he was the legal and beneficial owner of the intellectual property rights in the product, Mr Thone resiled from this in a declaration dated 19 June 2000.  In that second declaration, Mr Thone indicated that he had assigned the legal and beneficial rights in the International and Australian patent applications to a Dr Bauer on 7 March 1996.  The Marketing & Distribution Agreement stated that Mr Thone was the legal and beneficial owner of all the intellectual property rights in the German patent application.  There was no mention of the Australian or International applications. 

The International Court of Arbitration found that the Agreement of 1 September 1996 was duly executed by the parties and constituted a valid and enforceable contract between Jimik and Mr Thone.  Further, it found that the purported termination by Mr Thone was invalid, and that the Agreement continued in full force and effect. 

On this basis, the applicant says that it has a continuing right to take steps under the Agreement, including taking out trade mark applications pursuant to clauses 3(a) and 8.  Clause 3(a) provides that Jimik has the right to market the product on a worldwide basis.  Clause 8 provides that Jimik is responsible for securing any necessary licences or government consents as may be necessary for the purpose of carrying out the Agreement.

The opponent, on the other hand, says that nothing in the Agreement authorises Jimik to take out trade mark registrations for the relevant product.  In doing so, the opponent conceded that the agreement's use of the expression "intellectual property rights" is wide enough to cover trade mark rights.   However, the opponent submits that as the option was never exercised, Jimik remains a mere licensee, without any rights to seek registration of the trade mark in its own right.  This last submission is made on the basis that there is a clear nexus between the applied for trade mark and the Renolith product.  In the opponent's view, the nexus is strengthened when one takes into account the fact that the following device was invented at the same time as the "R" device which is the subject of the current dispute:

I will refer to this as the Renolith device.

As a consequence, the opponent alleges that Jimik, contrary to s.59 of the Act has no lawful intention to use the trade mark. Further, the applicant alleges that the application was false in material particulars contrary to s.62, in that Jimik impliedly asserted that it had the legal capacity to apply for registration, despite their contractual and fiduciary obligations to the contrary.

Finally, the opponent alleges that the applied for trade mark does not satisfy the requirements of s.41 in that it does not have the requisite capacity to distinguish.

Evidence

During the course of proceedings, only Evidence in Support was filed in strict compliance with the Trade Marks Regulations 1995.  That evidence comprised the statutory declaration of Mr Gerd Thone dated 17 May 1999 to which I have already referred.

However, on 22 June 2000, the opponent applied for leave to file further evidence in the form of the declaration by Mr Gerd Thone dated 19 June 2000. Because of the intervention of the Federal Court, the application for leave was not dealt with.  At the hearing, by consent, I granted the leave, and the declaration is now in evidence.

At the hearing, the parties also agreed that the following material should be allowed into evidence by consent, pursuant to Reg. 21.19:

Federal Court Material

• the transcript of the Federal Court proceedings dated 21 December 1999 ("the transcript");

• affidavit of Michael Robert Alexander dated 12 December 1999 including Exhibit 1 (MRA1);

• affidavit of John Clyde Behm dated 13 December 1999 including Annexure A (JCB1);

• affidavit of John Clyde Behm dated 9 February 2000 including Annexure A (JCB2); and

• affidavit of John Clyde Behm dated 10 February 2000 including Annexure A (JCB3).

International Court of Arbitration

• the Partial and Final Awards of the ICA dated 7 September 2001 and 31 January 2002 respectively ("Partial Award" and "Final Award");

• undated statutory declaration of Michael Robert Alexander (MRA2);

• statutory declaration Michael Robert Alexander dated 20 June 2001 (MRA3);

• undated statutory declaration of James Roderick Black (JRB1);

• statutory declaration of John Clyde Behm dated 17 May 2001 (JCB3);

• statutory declaration of Robert Philip Wulf dated 29 May 2001 (RPW);

• statutory declaration of John Clyde Behm dated 29 May 2001 (JCB4);

• statutory declaration of John Clyde Behm dated 2 June 2001 (JCB5);

• statutory declaration of Andreas Jurgen Hartmann dated 28 May 2001 (AJH); and

• undated Bundle of Documents, including, specifically, letter by Mr G Thone dated 12 January 1999.

Ancillary Documents

• the Distribution & Marketing Agreement dated 1 September 1996;

• the Heads of Agreement dated 9 January 1996 ("the Heads of Agreement"); and

• letter by Mr Greg Burgess to Mr John Behm dated 19 November 1999 ("the Burgess letter").

The Burgess letter states as follows:

I Gregory Ronald Burgess in conjunction with Mike Alexander of Jimik Investments P/L designed the Renolith logo on or about January 10, 1997.

I was asked by Mike Alexander at the beginning of January, 1997 to design and set up the data pertaining to the "Renolith" details.  We sat down at a computer and after several designs, settled on the now current "R" and "Renolith" logo design.

This design was completed and formulated along with the details about Renolith so as they could be either faxed or emailed.  The design was intended to be registered as a Trade Mark.

These details (logo and material) were faxed to Gerd Thone on or about January 28 for his perusal and he was asked what his thoughts were.  (These details and dates are on computer file).

Findings

At the outset, it is important for me to set out the nature of the opposition process. Notwithstanding that it may be incumbent upon the Registrar to take into account the provisions of other laws when considering, for instance, s.42(b), the Registrar's concern is to determine the validity of the trade mark in question. Here, I am called on to determine whether or not there are grounds for rejecting the "R" device. I am not called on to determine the validity of the Renolith device.

There is no doubt that the parties are engaged in a complex contractual dispute, and the dispute involves matters of private international law and commercial arbitration.  However, and in keeping with the abovementioned obligation, I do not propose to discuss, review or even revisit each contention that has been raised during the course of this dispute.  Rather, I will confine my decision to the fundamental question - whether Jimik was entitled to seek registration for the "R" device for a one part chemical solution for mixing with cement and soil to create a stable solid malleable composition in class 1.

The first point to be made is that, on my reading, the Agreement, does not specifically contemplate the "R" device.  Where the Agreement does deal with intellectual property rights, they are rights in the product Renolith and rights related to its marketing and distribution.  Pursuant to Clause 3 of the Agreement, which is entitled "Creation of Rights", Jimik was granted the right to manufacture and market the Renolith product. Jimik was also granted the right to purchase a 50 per cent share in Mr Thone's intellectual property rights in the Patent.  The parties have agreed that the "intellectual property rights" referred to in Clause 3  would include trade marks to be used in relation to the Renolith product.

The Agreement is however, silent as to the ownership of any intellectual property created by Jimik in pursuance of its right to manufacture and market the Renolith product.  On my interpretation of the Agreement, if Jimik were to use the expression "Renolith" in their marketing activity, including by way of trade mark, they would do so as an authorised licensee pursuant to Clause 3.  Accordingly, there might be at least some legal or equitable interest in hands of Mr Thone in fruits of the licence.  However, I am not satisfied that this interest would necessarily exist in trade marks which do not incorporate the "Renolith" name or are not otherwise specifically referable to Mr Thone's product.  There is nothing in the Agreement (except Clause 19 which requires Jimik to maintain confidentiality in trade secrets) that would require Jimik to refrain from manufacturing or marketing competing products.  Accordingly, it was open to Jimik to invent or commission trade marks which incorporated the expression "Renolith" and others which did not.  Mr Thone might have an interest in the former, but not in the latter, unless they were applied to the Renolith product.  I have not been shown any evidence which demonstrates use of the "R" device in association with the Renolith product. 

The opponent's s.59 submission rests on the thesis that, due to the operation of the Agreement, Jimik was not free at law, or at equity, to use the opposed mark in relation to the Renolith product as its own mark, or to seek a trade mark registration in its own name. The opponent's submission rests on three presumptions:

1. that there a nexus between the "R" device and the Renolith product;

2. that the "R" device will only ever be used in relation to the Renolith product; and therefore

3. that the "R" device falls within the scope of the Agreement, and Jimik is a mere licensee, rather than a proprietor of the trade mark with the right to seek registration in its own name.

I am not satisfied that the opponent's submission is correct.  While the Burgess letter indicates that there is a nexus between the "R" device and the Renolith product, it is a theoretical nexus only.  I have been shown no evidence of use of the "R" device in relation to the Renolith product, and there is nothing in the specification of the goods to which the trade mark will be applied or in the application itself that limits use of the trade mark to the Renolith product. The application merely describes the type of product to which the trade mark is to be applied.  The application does not mention the Renolith product by name nor does it identify it by reference to any specific ingredient or unique attribute that Renolith possesses.  The specification is nothing more than a generic description of a substance which is mixed into concrete.  The fact that the specification is capable of covering the Renolith product does not mean that the trade mark will be applied to the Renolith product.

Nor is there anything in the Agreement which limits Jimik's activities to Renolith products.  They are free to develop and market competing products.  Such products may be designed to carry out the same function as the Renolith product, and they may be sold under a name that starts with the letter "R".  However, and subject to the operation of Clause 19 which covers trade secrets, I have not been shown anything in the Agreement, or taken to any law, which indicates that such a course of action would be unlawful or in breach of the Agreement.  There is nothing before me that indicates that use of the "R" device would mean that Clause 19 has been contravened.

Therefore, the opponent's submission that Jimik was not free at law or in equity to use the opposed trade mark in relation to the Renolith product is moot. I am not satisfied that this is the only product to which the trade mark can be applied. I am therefore not satisfied that Jimik does not have the lawful intention of using the trade mark in the manner required by s.59. The mere fact that use in relation to the Renolith product might be contrary to the Agreement does not render all uses of the trade mark, in relation to other products covered by the specification, unlawful.

The opponent's alternative argument, under s.62, that the act of filing the application was a false representation that the applicant was entitled to seek registration for the "R" device must also fail. As I have already mentioned, there is nothing in the application which conveys the impression that the trade mark inextricably linked with, or that it will be applied to, the Renolith product, exclusively or otherwise. For the reasons I have already provided, the specification is much wider than the Renolith product. There was no mention in the application, or in material placed before the examiner, that the trade mark was to be applied exclusively to the Renolith product. I have not been taken to, nor can I find, any further material where the applicant or its representatives indicate that the trade mark was to be used exclusively in relation to the Renolith product. Therefore, I do not consider that the applicant made any false representations regarding its right to seek registration of the trade mark in question.

I see no other basis on which the opponent could establish a prior right to the trade mark in question.  Certainly, the opponent is not the author of the "R" device.  Nor does the Agreement indicate that the opponent has any rights to intellectual property invented or authored by Jimik. 

In relation to the s.42(b) argument, which rested on whether the trade mark is owned conjointly by Jimik and Mr Burgess, I am not satisfied that the application has been brought in an incorrect name, or that use of the trade mark by Jimik would constitute a breach of copyright.

In relation to s.41, the opponent argues that the R logo has only a very low level of distinctiveness. In making its submission, the opponent relies on the decision in Ford-Werke AG's Appn (1955) 72 RPC 191, where it was found that the following trade mark lacked the requisite inherent distinctiveness:

Here, the applied for device is significantly more distinctive than the slightly-stylised letters and oval device used in Ford-Werke: 

The inclusion of a roadway in the oblique downstroke of the "R", and the inclusion of a sickle-styled shape in the rounded portion of the "R" means that while the concept of an "R" is maintained, its appearance is significantly altered. Certainly, it is not merely a rendering of an "R" in an unusual font. There appears to be no reason why another trader, acting in good faith would have a need or desire to use the trade mark in relation to their goods and services. Therefore, I am satisfied that the applied for trade mark is inherently adapted to distinguish, and there is no need to have recourse to s.41(5).

Determination and Costs

I am not satisfied that the opponent has made out any of the grounds which rely on ss.41, 59 and 62. Nor am I satisfied that the opponent should succeed in its assertion, made at the hearing, that use of the trade mark would be contrary to law under s.42(b). Therefore, the opposition is dismissed.

Subject to the payment of any outstanding fees, I direct that the application may proceed to registration after the expiry of six weeks from the date of this decision.  If an appeal is lodged and served within that time, I direct that registration shall not occur until the appeal has been decided or discontinued.

On the question of costs, I direct that the opponent pay Jimik's costs in accordance with Schedule 8 of the Trade Marks Regulations 1995.

Geoff Purvis-Smith

Hearing Officer

Trade Marks Hearings

19 December 2002